Now, this would be bad enough if the loan they were looking at was a standard long-term mortgage, but more often than not, the reason the borrower has gone to that bridging lender in the first place is that they need a quick funding solution.
Bridging loans, by their very nature, are short-term, and most borrowers are looking for a very quick turnaround – sometimes little more than 48 hours.
Therefore, if they have gone to a bridging lender who said yes, then later went back on that, the borrower has wasted valuable time. This makes their already limited timescales ever more constrained when they later try and source alternative funding.
Worse still, if the lender has said yes and they get a few weeks down the line and then finds they cannot process the loan, it could jeopardise the deal the borrower has in place, potentially costing them thousands of pounds.
One common reason why a bridging lender may initially say yes and then say no is to do with where they source their funding. If they are having to use external credit, they will not have the final say on the criteria surrounding the loan, and that could put its availability at risk.
The key learning here for brokers is that they can avoid this type of scenario by getting to know the lenders that can actually deliver on their ‘yes’. That is why it is often beneficial to choose a principal lender – one that has its own source of funding – that can make individual decisions based on each borrowers’ own specific circumstances. That way there is little risk of a yes turning into a no.
And while the proper yes men may not be the cheapest on the market, cheapest isn’t necessarily best, and there is no point in having a great rate on a loan that never comes to fruition.